TPP Expected to Create New Momentum for Vietnam-US Trade TiesUpdate: 1/21/2015
The pending Trans-Pacific Partnership (TPP), if completed this year, will create an important momentum for the economic ties between Vietnam and the US, particularly when the two countries mark the 20th anniversary of normalization of their ties in 2015, most experts agreed.
As the US is an important market of Vietnam, the TPP, with its extensive tariff cuts and investment liberalization measures, will give Vietnam’s products greater access to the US as well as the markets of other TPP members.
It is projected that the country’s export value to the US will rise by at least 20 percent, making the US the biggest export market of Vietnam.
Nguyen Hong Duong, deputy head of the American Market Department under the Ministry of Trade and Industry, said with the TPP in place, many Vietnamese commodities will become more competitive when the tax level is reduced to zero.
“There are many opportunities for Vietnam to increase exports to the US even without the TPP, because Vietnamese goods currently account for only 0.98 percent of the US’s imports,” Duong said.
Stuart Schaag, trade counselor at the US Embassy in Hanoi, noted that Vietnam’s exports to the US have doubled since 2009, while the US’s exports to Vietnam went up by 61 percent.
He added that the TPP can also increase the flow of US investment into Vietnam.
Experts said the TPP negotiations have helped address existing issues between Vietnamese and US businesses such as intellectual property and financial service suppliers.
At the same time, they reminded Vietnamese companies of challenges they will face in the US market, ranging from pressure to open up the market to the threat of trade lawsuits.
Duong pointed to the US’s strict trade and technical barriers, especially for agricultural products and food.
Another barrier to Vietnam commodities is the requirement for materials and parts of products to have their origin in Vietnam or other TPP members in order to enjoy preferential tariff levels.
Therefore, experts urged Vietnamese manufacturers to join regional and global production and supply chains, strictly observe international regulations on investment, labour and environment as well as TPP stipulations. At the same time, the State should adjust the legal system in line with the TPP and popularise information on the agreement.
The TPP covers 12 Pacific Rim nations which are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam. The 12 members, which together account for 37.5 percent of the world GDP and 11.2 percent of the world population, have completed the 19th round of negotiations on the agreement.